“valuation of shares”

Special Rate ProvisionsRule 11UARule 11UA508 judgments

The decision most relied on for valuation of shares is PCIT v. Chain House International (P) Ltd. (98 Taxmann.com 47), cited in 104 judgments on BharatTax.

Leading authorities on valuation of shares

PCIT v. Chain House International (P) Ltd.

98 Taxmann.com 47 · 2018 · High Court

104

citing judgments

The Assessing Officer cannot arbitrarily reject a share valuation report prepared by an expert using recognized methods like NAV or DCF for the purpose of Section 56(2)(viib) without providing valid reasons to demonstrate its perversity or unreasonableness.

CIT v. George Henderson & Co. Ltd.

66 ITR 622 · 1967 · Supreme Court

citing judgments

The 'full value of consideration' for computing capital gains under Section 48 of the Income Tax Act, 1961 (or its predecessor, Section 12B of the 1922 Act), means the actual price bargained for and received or accrued by the parties. It does not refer to the market value or any notional value of the asset transferred.

Vodafone M-Pesa Ltd. v. PCIT

164 DTR 257 · 2018 · High Court

citing judgments

An assessee has the option to choose either the Discounted Cash Flow (DCF) method or the Net Asset Value (NAV) method for share valuation under Section 56(2)(viib) read with Rule 11UA. The Assessing Officer cannot substitute the chosen method or value without identifying a specific error in the assessee's valuation.

CIT v. Green Infra Ltd.

78 Taxmann.com 340 · 2017 · High Court

citing judgments

The valuation of shares is not relevant for determining the genuineness of a transaction under Section 68 of the Income Tax Act. Interest income earned on the deposit of surplus funds is taxable as business income.

CIT v. Bank of Baroda

262 ITR 334 · 2003 · High Court

citing judgments

An assessee is entitled to claim a deduction for the depreciation in the value of investments, such as shares and securities, if these investments are valued at cost or market value, whichever is lower, consistent with the real income principle.

PCIT v. Cinestaan Entertainment Pvt Ltd.

433 ITR 82 · 2021 · High Court

citing judgments

The Assessing Officer cannot reject the share valuation method adopted by an assessee under Section 56(2)(viib) if it adheres to prescribed methodologies and commercial prudence. The valuation cannot be challenged based on future performance or by substituting another method.

Jeevan Investment & Finance (P.) Ltd. v. CIT

88 Taxmann.com 552 · 2017 · High Court

citing judgments

An Assessing Officer's failure to conduct necessary inquiries renders the assessment order erroneous and prejudicial to the revenue, justifying revision under Section 263.

Innoviti Payment Solutions Pvt. Ltd. v. ITO

102 Taxmann.com 59 · 2019 · ITAT

citing judgments

The Assessing Officer (AO) cannot discard the Discounted Cash Flow (DCF) method for share valuation if the assessee opts for it as per Rule 11UA(2). The AO must record reasons for not accepting the assessee's valuation report and obtain a fresh report before proceeding with their own valuation, but cannot change the method chosen by the assessee.

Judgments citing valuation of shares

Neel Metal Products Ltd, New Delhi vs. ACIT Central Circle-25, New Delhi

ITA 239/DEL/2021[2018-19]Status: DisposedITAT Delhi09 Jul 2024AY 2018-19

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharma

For Appellant: Shri Salil Aggarwal, Sr.AdvocateFor Respondent: Shri Subhra Jyoti Chakraborty

report obtained under rule 11UA from M/s ANSP & Associates at Rs. 14.08 per share. 25. We find that there was no independent valuation of shares by AO and merely relying on the seized letter found, which too, was not for valuation shares but was for estimate working of capital gains

Neel Metal Products Ltd, New Delhi vs. ACIT Central Circle-25, New Delhi

ITA 238/DEL/2021[2017-18]Status: DisposedITAT Delhi09 Jul 2024AY 2017-18

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharma

For Appellant: Shri Salil Aggarwal, Sr.AdvocateFor Respondent: Shri Subhra Jyoti Chakraborty

Neel Metal Products Ltd, New Delhi vs. ACIT Central Circle-25, New Delhi

ITA 232/DEL/2021[2013-14]Status: DisposedITAT Delhi09 Jul 2024AY 2013-14

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharma

For Appellant: Shri Salil Aggarwal, Sr.AdvocateFor Respondent: Shri Subhra Jyoti Chakraborty

Capitalg International Llc (Formerly Known As Gc Aisa L.L.C.), Mumbai vs. Assistant Commissioner of Income Tax Int Tax Circle 2(1)(1), Mumbai

ITA 1632/MUM/2023[2017-2018]Status: DisposedITAT Mumbai08 Jul 2024AY 2017-2018

Section 143(3)

distinguishable from the facts of assessee. 7. It is noticed that the assessee mainly relied on valuation report dated 26.02.2016 & 20.09.2016 for valuation of shares of Girnar Software Company The purchase value of the share was determined at Rs. 67.940.09 by the Independent Valuer, ie, M/s SPA Advisors ... within a short span of 7 months between the 2 valuation reports. Secondly, even with changed estimated figures, surprisingly, the under brought the valuation of shares to the same value. Thus the entire exercise of valuation appears have no basis but an ex- post facto venture to arrive

A.H.Multisoft P.Ltd, New Delhi vs. ITO, Ward-1(1), New Delhi

Appeal of the appellant is dismissed

ITA 2400/DEL/2023[2016-17]Status: DisposedITAT Delhi05 Jul 2024AY 2016-17

Bench: SHRI G.S PANNU, HON'BLE (Vice President), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri Sanjiv Sapra, CAFor Respondent: Shri Zafarul Haque Tanweer, CIT-DR

Section 143(3)

unjustified premium have been issued to outside non-related parties so as to make addition section 56(2)(viib) of the Act. the valuation of shares as per DCF Method has backed by valuation report. Besides, the shares have allotted to the holding-company i.e., existing shareholders ... that in case of fresh issue of shares made by unquoted Co. the AO is not authorized to pick and choose method of valuation of shares since that option is given to the Assessee. Where the Assessee exercises its option to value its shares as per DCF method

Enn Vee Holdings Pvt Ltd, New Delhi vs. DCIT Central Circle 31, New Delhi

In the result, the addition made u/s 68 and u/s 56(2)(viib) in the case of M/s Realtime Marketing Pvt

ITA 1195/DEL/2023[2016-17]Status: DisposedITAT Delhi05 Jul 2024AY 2016-17

Bench: Dr. B. R. R. Kumar, Sh. Yogesh Kumar Us

For Appellant: Sh. Neeraj Jain, Adv. &For Respondent: Ms. Sapna Bhatia, CIT-DR

Section 132Section 132(4)Section 143(1)Section 143(2)Section 153ASection 68

fair market value of the share is required to be determined either by the Merchant Banker or by the Chartered Accountant. The valuation of shares based on DCF is basically to see the future year's revenue and profits projected and then discount the same to arrive at the present ... assessee and he analyzed the factual performance of the assessee Realtime Marketing & ENN VEE Holdings Pvt. Ltd. subsequent to issue o: shares. The valuation of shares are for that matter any valuation is itself is a projection of future events oi activities and no doubt it has to be done

DCIT, CC-31, New Delhi vs. Realtime Marketing Pvt. Ltd., Delhi

In the result, the addition made u/s 68 and u/s 56(2)(viib) in the case of M/s Realtime Marketing Pvt

ITA 1839/DEL/2021[2015-16]Status: DisposedITAT Delhi05 Jul 2024AY 2015-16

Bench: Dr. B. R. R. Kumar, Sh. Yogesh Kumar Us

For Appellant: Sh. Neeraj Jain, Adv. &For Respondent: Ms. Sapna Bhatia, CIT-DR

Section 132Section 132(4)Section 143(1)Section 143(2)Section 153ASection 68

Sapphire Trade Associates (P) Ltd., Kolkata vs. ITO, Ward-8(2), Kolkata.

In the result, the appeal of the assessee is allowed

ITA 709/KOL/2023[2014-15]Status: DisposedITAT Kolkata24 Jun 2024AY 2014-15

Bench: Shri Sanjay Garg&Shri Rajesh Kumar]

Section 131Section 133(6)Section 143(1)Section 143(3)Section 68

assessment order u/s 143(3) a copy of which is filed at page 786 to 788 of PB. We have also examined the valuation of shares as made by SDP& Associates for the purpose of section 56 read with Rule 11UA of the Rules and note that the premium

Assistant Commissioner of Income Tax Central Circle-1(3), Nagpur vs. M/S Vedsidha Products Privat Limited, Nagpur

In the result, appeal filed by the Revenue is allowed

ITA 25/NAG/2020[2014-15]Status: DisposedITAT Nagpur12 Jun 2024AY 2014-15

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Mahavir AtalFor Respondent: Shri Abhay Y. Marathe

Section 44ASection 56(2)(viib)

cost of the industrial land with that of the Valuation estimated by the Registered Valuer as in 2012, which was used for the valuation of shares in 2013. Therefore, the learned CIT(A) was of the view that the assessee has correctly adopted the fair market value of the asset ... hence the valuation of shares based on this factor, has been adequately determined. As per the valuation report total area of land is ` 28,200 per sq.mt and the fair market M/s. Vedsidha Products Pvt. Ltd. ITA no.25/Nag./2020 value rate adopted by the valuer is ` 2,000 per sq.mt

ITO Ward - 24(1), New Delhi vs. Solitaire Btn Solar Pvt Limited, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 1416/DEL/2020[2016-17]Status: DisposedITAT Delhi12 Jun 2024AY 2016-17

Bench: Shri Kul Bharat & Shri Pradip Kumar Kedia

For Appellant: Shri Gaurav Jain, AdvocateFor Respondent: Shri Gurpreet Singh, Sr.DR

Section 143(3)Section 250Section 56(2)(viib)

viib) is not applicable since the OCPS have been allotted to none other than the holding company. The Rules applied for valuation of shares were also challenged. The CIT(A) recorded the submissions of the assessee in the first appellate order and on conspectus of facts, adjudicated the issue

Chemitech Engineers Pvt Ltd, New Delhi vs. ACIT Circle-6(1), New Delhi

In the result, the appeal of the assessee is allowed

ITA 9074/DEL/2019[2015-16]Status: DisposedITAT Delhi12 Jun 2024AY 2015-16

Bench: Shri Kul Bharat & Shri Pradip Kumar Kedia

For Appellant: Sh. Sanjay Kumar, Chartered AccountantFor Respondent: Ms. Sarita Kumar, CIT-DR

Section 143(3)Section 263Section 56(2)(viib)

annual general meeting of the shareholders of the company. 2.1 It is seen that in the present case, for the purpose of valuation of shares, the company has not submitted any balance sheet which has been audited by the Auditor. In support of the fair market value of the shares

DCIT, Chennai vs. Tvs Investments Lrd., Chennai

In the result, the Revenue's appeal as well as the assessee's Cross Objection are allowed for statistical purposes

ITA 262/CHNY/2017[2010-11]Status: DisposedITAT Chennai11 Jun 2024AY 2010-11

Bench: Hon’Ble Shri Aby T. Varkey, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ Ita No.262/Chny/2017 (िनधा*रण वष* / Assessment Year: 2010-11) Dcit M/S. Tvs Capital Funds (P) Limited (Formerly Known As Tvs Investments Limited) Corporate Circle-3(1) बनाम/ Jayalakshmi Estates, Chennai-600 034. Vs. No.29, (Old No.8), Haddows Road Chennai-600 006. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaact-1154-H (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Dr. D. Praveen (Jcit) -Ld. Dr " थ"कीओरसे/Respondent By : Shri R. Vijayaraghavan, (Advocate)-Ld. Ar सुनवाईकीतारीख/Date Of Hearing : 15-05-2024 घोषणाकीतारीख /Date Of Pronouncement : 11-06-2024 आदेश / O R D E R

For Appellant: Dr. D. Praveen (JCIT) -Ld. DRFor Respondent: Shri R. Vijayaraghavan, (Advocate)-Ld. AR

necessary evidences including fair market value of the shares as determined by the registered valuer in terms of relevant rules prescribed for valuation of shares. The assessee also relied on the decision of Chennai Tribunal rendered in the case of other promoter group entity i.e., TMCL titled as ACIT

DCIT, CC-20, Delhi vs. Weldon Polymers Pvt. Ltd., Delhi

The appeal of the Revenue is dismissed

ITA 1868/DEL/2021[2017-18]Status: DisposedITAT Delhi10 Jun 2024AY 2017-18

Bench: Shri Gs Pannu & Shri Anubhav Sharma

For Appellant: Shri Salil Kapoor, Adv. and Shri Utkarsh Kumar Gupta, AdvFor Respondent: Shri Amit Katoch, Sr. Dr

Section 143(3)Section 56(2)(viib)Section 68A

payment capacity on preference shares. Therefore, this objection of the AO also is not sustainable.” 11. We are of the considered view that valuation of shares is a technical and complex issue for which the AO has limited authority to tinker the valuation of methodology applied. As we observed

Hatch Tact Innovations Private Limited, Gurgaon vs. Pr. CIT, Faridabad

The appeal of the assessee is allowed

ITA 1261/DEL/2021[2016-17]Status: DisposedITAT Delhi04 Jun 2024AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2016-17 Hatch Tact Innovations Private Vs Pr. Cit, Limited, Faridabad. C2/215, Jal Vayu Towers, Sector 56, Gurgaon (Haryana) – 122 002. Pan: Aadch5527R (Appellant) (Respondent) Assessee By : Shri P.K. Jain, Ca Revenue By : Ms Sapna Bhatia, Cit-Dr & Shri Amit Katoch, Sr. Dr Date Of Hearing : 05.04.2024 Date Of Pronouncement : 04.06.2024 Order Per Anubhav Sharma, Jm:

For Appellant: Shri P.K. Jain, CAFor Respondent: Ms Sapna Bhatia, CIT-DR &

Section 143(3)Section 263Section 56(2)(viib)

flow method in case of unlisted companies as determined by SBI Registry merchant banker or a Chartered Accountant. Therefore, no other view of valuation of share by invoking Rule 11UA could be made. The ld. AR has relied the orders: 6 Mohak Real Estate Private Ltd. vs. PCIT, ITA No.1068/Del/2021 ... case, based on certain facts coming out of the manner in which the AO had scribed certain observations in regard to acceptance of valuation of shares after subscribing his signatures on the assessment order, Hon’ble High Court had concluded that no satisfaction was recorded by the AO for accepting

Agrasen Primses Private Limited, Jaipur vs. ITO Ward 5(1), Jaipur

ITA 125/JPR/2023[2014-15]Status: DisposedITAT Jaipur30 May 2024AY 2014-15

For Appellant: Ms. Parba Rana (Adv.)&For Respondent: Shri A.S. Nehra (CIT)

Section 133ASection 142(1)Section 143(2)Section 143(3)

आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR डा० एस. सीतालक्ष्मी, न्यायिक

Krishna Developers Pvt Ltd., Mumbai vs. Assistant Commissioner of Income Tax, Circle -10(1)(2), Mumbai

In the result, the appeal of the assessee is allowed

ITA 4292/MUM/2023[2009-10]Status: DisposedITAT Mumbai30 May 2024AY 2009-10

Bench: Shri B.R. Baskaran & Ms.Kavitha Rajagopalassessment Year : 2009-10 M/S. Krishna Developers Pvt. Ltd. 508, Gundecha Chambers, Nagindas Master Road, Fort, Mumbai – 400 023. Pan: Aabck-5678-G ---- Appellant Vs. Assistant Commissioner Of Income Tax, Circle – 10(1)(2), Mumbai Room No.651, 6Th Floor, Aaykar Bhavan, M.K. Road, Mumbai – 400 020. --- Respondent

For Appellant: Shri Rakesh JoshiFor Respondent: Shri P.D. Chougule, Sr. DR

Section 115JSection 133ASection 143(1)Section 143(3)Section 148Section 68

share capital issued at very high premium was bought back at face value of Rs.10/-. Also no valuation report was submitted about the valuation of shares at such a high premium. When all these were confronted to director Shree Vijay Khetan accepted the anomalies and disclosed the sum of Rs.7

DCIT, Circle- 3(1), New Delhi vs. Apollo Fiege Integrated Logistics Pvt. Ltd., Gurgaon

In the result, both the appeals filed by the Revenue are dismissed

ITA 7834/DEL/2019[2016-17]Status: DisposedITAT Delhi21 May 2024AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2015-16 Assessment Year 2016-17 Acit, Vs Apollo Fiege Integrated Circle-3(1), Logistics Pvt. Ltd., New Delhi. Plot No.20, Sector-44, Gurgaon, Haryana – 122 002. Pan: Aalca0748D (Appellant) (Respondent) Assessee By : Shri Pradeep Dinodia, Shri R.K. Kapoor & Shri Harish Dhamija, Ca’S Revenue By : Shri Zafarul Haque Tanweer, Cit- Dr Date Of Hearing : 22.02.2024 Date Of Pronouncement : 21.05.2024 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Revenue Against The Order Dated 31.07.2017 Of The Commissioner Of Income Tax (Appeals)-I, New Delhi, (Hereinafter Referred As Ld. First Appellate Authority Or In Short Ld. ‘Faa’) In Appeal No.722/16-17 Arising Out Of The Appeal Before It Against The Order Dated

For Appellant: Shri Pradeep DinodiaFor Respondent: Shri Zafarul Haque Tanweer, CIT- DR

Section 143(3)Section 14ASection 56(2)(viib)Section 68

justify the above addition. 2. On the facts and circumstances of the case, Ld. CIT(A) is not justified in holding that valuation of shares has been determined at Rs. 50/- per share as per DCF method and so no excess premium has been charged without appreciating the facts brought ... record by the AO that the valuation of shares made by assessee as per DCF method is erroneous as statements for F.Y. 2014-15 & F.Y. 2015-16 in which total revenues are shown at Rs. 204.97 cr. & Rs. 206.95 cr. and profit before

ACIT, Circle- 3(1), New Delhi vs. Apollo Fiege Integrated Logistics (P) Ltd., Gurgaon

In the result, both the appeals filed by the Revenue are dismissed

ITA 6151/DEL/2017[2015-16]Status: DisposedITAT Delhi21 May 2024AY 2015-16

For Appellant: Shri Pradeep DinodiaFor Respondent: Shri Zafarul Haque Tanweer, CIT- DR

Section 143(3)Section 14ASection 56(2)(viib)Section 68

Accel India Venture Fund II L.P., Cayman Islands vs. ACIT Circle-1(1)(1) Intl. Taxation, New Delhi

In the result, the appeal is partly allowed for statistical purposes

ITA 2655/DEL/2023[2020-21]Status: DisposedITAT Delhi15 May 2024AY 2020-21

Bench: Shri Saktijit Dey, Vice- & Dr. B.R.R. Kumarassessment Year: 2020-21 Accel India Ventures Fund Ii Vs. Acit (International Taxation), L.P. Cayman Islands, Circle-1(1)(1), Walkers, 190 Elgin Avenue, New Delhi George Town, Grand Cayman Ky1 -9001, George Town, Not Listed 999999 Pan :Abpfa4451K (Appellant) (Respondent) Assessee By Sh. T. Suryanarayana, Sr. Advocate Department By Sh. Vijay B. Vasanta, Cit(Dr)

Section 143(3)Section 144C(13)

submitted, 4 | P a g e AY: 2020-21 while making the addition of entire capital gain, the Assessing Officer has rejected the valuation of shares made by the assessee on the ground that the financials of the company, whose shares were sold, were not furnished. He submitted

Native Konbac Bamboo Products Pvt Ltd, Mumbai vs. Income Tax Officer 7 (2) (3), Mumbai

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 4851/MUM/2023[2015-16]Status: DisposedITAT Mumbai09 May 2024AY 2015-16

Bench: Shri Pavan Kumar Gadale, Jm & Ms Padmavathy S, Am

For Appellant: Shri Anant N Pai, CAFor Respondent: Shri Laxmi Kant, Sr. DR

Section 56(2)(viib)

money along with the premium of Rs. 1,43,92,200/-. The AO called on the assessee to furnish details with regard to valuation of shares. After perusing the various details furnished by the assessee, the AO was of the view that there is an excess transaction received